Hogge Banned From Bank Work

Ex=nnsb Duo To Repay Thrift

March 16, 1991|By DAVID RESS Staff Writer

NEWPORT NEWS — Federal regulators have banned the former president of Newport News Savings Bank, Jerome W. Hogge Jr., from working at any savings and loan or bank unless he first obtains their written approval.

The federal Office of Thrift Supervision also ordered former Newport News Savings directors Theodore W. Potter and Kendall Jones each to repay the thrift $10,000 from sums they had received from a property venture in North Carolina.

The agency's actions were outlined in separate formal orders issued to each of the three. The agency released copies of the orders to the Daily Press this week. Hogge's order is dated last September, Potter's is dated Jan 8, and Jones' is undated.

Office of Thrift Supervision spokesman Paul Lockwood said a ban such as that imposed on Hogge was ``probably the most serious thing we can do to an individual,'' although he noted that the agency does have the authority to levy fines of up to $1 million a day for some violations.

Lockwood estimated the agency is imposing about a half-dozen such bans a month as part of a major effort that started in 1989 to clean up the ailing savings and loan sector.

Hogge, who is now working in real estate on the Peninsula, said he would not comment on the Office of Thrift Supervision order.

He resigned from Newport News Savings in November 1988. His resignation followed an investigation by the bank's board into alleged improprieties by two senior officers the bank did not publicly identify.

Board minutes from October 1988 recorded that bank directors had been presented with allegations that Hogge improperly charged the bank more than $1,700 in personal expenses.

The savings bank announced the resignation from the board of Jones and Potter in a July 24, 1989, statement. That statement outlined State Corporation Commission findings that actions of several bank officers and directors had involved conflicts of interest and ``unsafe or unsound practices.''

Potter resigned his position as chief operating officer of the bank in July 1990, and at that time accepted a $90,000 settlement from the bank to resolve his employment contract, according to the bank's proxy statement for its annual meeting last October.

Potter said his decision to accept the agency's order was not an admission of wrongdoing. He said he believed he had not violated federal regulations, but did not have the resources to continue contesting the matter.

``I made what I term to be a good business decision to put this whole matter behind me,'' Potter said.

Jones was out of town and could not be reached for comment.

The Office of Thrift Supervision's order of prohibition to Hogge said he ``may not hold any office in, or participate in any manner in the conduct'' of institutions covered by the Federal Deposit Insurance Act, without receiving prior written consent from regulators.

The order said Hogge had executed a Stipulation and Consent to Issuance of Order of Prohibition. A stipulation is a statement of facts agreed to by both parties in a legal proceeding. Its terms were not disclosed in the order.

The separate Orders to Cease and Desist issued to Potter and Jones require that each ``shall pay in full the amount of $10,000 as restitution for amounts received from the Hogge, Jones, West, Potter venture in Nags Head.''

The order gave no further details.

In an Aug. 21, 1989 letter to stockholders, Newport News Savings reported that the SCC had criticized a venture in the North Carolina Outer Banks community of Kitty Hawk, near Nags Head, involving the three men and Jonathan West, the son of Caleb D. West, who was the thrift's chairman at the time.

The younger West was then vice president of Newport News Service Corp., a real estate investment subsidiary of Newport News Savings.

According to the thrift's letter to stockholders, West joined Hogge, Potter and Jones in building five residential properties in Kitty Hawk in 1986 and 1987.

The thrift's letter said the SCC decided that venture took advantage of a business opportunity to invest in the property at the expense of Newport News Service Corp.

The letter also said that Newport News Savings later made mortgage loans for a total of $244,000 on two of the properties, noting that the Office of Thrift Supervision bans thrifts from making mortgage loans for property in which directors or officers have an interest. Only homes are exempt from that rule, according to the thrift's letter.

Potter told the Daily Press on Thursday that he was unaware of the loan applications and that he had tried to stop them when he found out. Potter said he thought he had succeeded in stopping the loans.

The North Carolina venture was one of seven conflicts of interest or improper deals the SCC complained of, according to the thrift's letter to stockholders. The letter said Newport News Savings had drafted new business practice standards to prevent such problems.